"I personally believe there's a lot of value in GM stock that's been badly treated by Wall Street," he told CNNMoney at the Milken Institute Global Conference in Los Angeles.

Shares of GM have dropped roughly 30% since the automaker went public in November 2010. "The Treasury always assumed it would hold onto it for awhile maybe as long as five, six, or seven years," said Rattner.

In late 2008, the U.S. Treasury spent roughly $50 billion for a 61% stake in GM.

Since then, the government has managed to cut that stake in half but it's still owed $27 billion. For taxpayers to break even, GM's stock needs to more than double to $51.

Rattner admits that calculating when to sell the remainder is both an economic and a political issue. "I don't think that selling it in the heat of an election year makes financial or political sense," he said.

"The shares need to be sold in a responsible fashion and the proceeds turned over to the nation's taxpayers," the presidential hopeful wrote in the Detroit News in February.

While calling GM's shares undervalued, Rattner said that the Detroit automaker still must work to make the company more "lean and mean." To do so, Rattner said General Motors must rethink its middle management process and cut down decision making time.

"Car companies got in trouble, because they didn't have the right products," he said. "Now they have better products, but they need still better products."

Just this week, General Motors raised its full-year forecast for light vehicle sales to between 14 million and 14.5 million from 13.5 million to 14 million, despite reporting an 8% drop in overall sales last month.